New Small Business Loans are Essential for Growth
If you are hoping to start a small business in the near future and you haven't got access to a large supply of ready cash, then you will probably be considering getting a new small business loan. Various institutions exist that might be able to help you get the necessary finance; these institutions have specialized loans that are dedicated to purchasing new businesses and have interest rates that are calculated for these types of loans.
The companies offering new small business loans will often work out finance for the entire business start-up to include purchase of land, real estate, stock inventory, equipment from previous owner, necessary new equipment, and enough working capital to survive short-term requirements of staff wages, repairs to equipment, headed notepaper, and some sort of marketing plan which might include a website creation and promotion, etc.
New small business loans can be used for purchasing franchises ranging from a $0.25M to $2M or existing businesses; the prospective buyer will need a credit rating of at least 650, a deposit of 15% to 20% as a minimum, and preferably some good knowledge and previous relevant experience with that type of business.
Secured Business loan Vs Unsecured Business Loan
If all the above criteria are satisfied and the prospective new business owner is prepared to accept a secured business loan, which usually means putting up their own house as collateral which the bank can claim if the applicant defaults on their payments of the loan, then it should be reasonably easy to get the the required small business finance; a well presented business plan, showing predicted sales (with some amount of market research to back it up) and a detailed forward plan of all accounts for the next 2 years, should be enough to get the required finance, if the business is viable.
Unsecured business loans are a lot more difficult to get and will inevitably have a higher interest rate. Also the business plan has to be of an altogether higher calibre than for a secured business loan. A detailed business plan takes a lot of time to create, or alternatively a lot of money if you get an expert to produce one for you. It is all too easy to get frustrated at this stage of trying to get the business up and running, as you probably just want to get on with the business and start making it pay back the money that youíve poured into it; don't get despondent and just concentrate on doing everything that is necessary to get a well-prepared business plan.
Beware taking on members of your family
One of the more critical factors for a successful business is the dedication and skill of the workforce; unmotivated staff who are only interested in satisfying their own needs can soon become a handicap to a business, particularly when you are trying to start a small business. Employing family members can be a good idea for close family members who are as fully enthused and committed to the business as you. But beware of relatives who are not in the immediate family e.g nephews, nieces, uncles, aunties, cousins, etc; they may think that they can get away with more liberties with you as you are family, and start to take advantage of you; starting a small business could soon lead to starting a large nightmare.
If you reside in the US, whatever the type of loan, ensure that any requirements set out by the SBA aka Small Business Administration, are met in full before seeking a new small business loan. The SBA will provide good business loan information and will work with the bank or lending organization; no lending can take place without the SBA's approval.
In the UK, the British Chamber of Commerce have a very useful business start-up pack which includes good advice about business loans, business insurance, new technology and telecommunications issues and any UK banks will usually offer a business expertís advice on the setting up and running of the business. Many of the UK banks offer an advice service on employment issues which can be rather pricey when starting a small business, but very worthwhile.